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The eBearing News
September 21, 2006
Gabriel Exiting Engine Bearing Business
copyright © 2006 eBearing Inc.
Gabriel India Ltd. (a publicly traded division of Anand Automotive Systems, India; BSE SMALLCAP:
505714)
(website)
revealed it has decided to sell off its Engine Bearings Division to Federal-Mogul Corp. (USA;
operating under Chapter 11 bankruptcy protection since October 2001).
By name, Engine Bearings is half of Gabriel India, whose only other division is Ride Control.
However, Engine Bearings contributes less than 7% of sales.
The sudden decision marks a dramatic turnaround for the fate of Engine Bearings Division.
Only two months ago, Gabriel was announcing an $850,000 program to aggressively invest and expand
production and sales from the current $1.3 million to $3.2 million.
article: Gabriel India adds to engine bearing capacity
Gabriel manufactures engine bearings in two vertically-integrated plants -- Parwanoo
(Himachal Pradesh) and Khandsa (Gurgaon) -- with a combined capacity of 23 million pieces per year.
Both plants are equipped with their own effluent strip plating lines, induction heat treating
furnaces, sinter lines, automatic presses, and high speed boring and broaching machines.
The other key player in the spinoff is Federal-Mogul Corporation, which currently owns
5.15%, or 3.7 million shares, of Gabriel India Ltd.
The Parwanoo facility was built in 1978 as a joint venture with Federal-Mogul. Gabriel
claims it is the first in India to have integrated manufacturing for a full range of
bimetal bearings, flanges and thrust washers, including manufacturing of powder metal and bimetal strips.
Gabriel is a leading engine bearing supplier to India's OEM automotive and
replacement markets, as well as to heavywall applications such as rail, marine and power generation equipment.
The factory's bearings are also exported to North America, Europe, Singapore and the United Kingdom.
The plant in Khandsa (Haryana) is relatively new, and manufactures aluminum tin bearings.
Overall, Gabriel Engine Bearings production is approximately 3,000 different part numbers, in
thinwall bearings, bushing and thrust washers, in inch-dimension IDs ranging
from 1.5" to 4.75". Large size bearings, which Gabriel quotes in IDs up to 300mm, are produced from
cast strip more than 4.5mm thick, and used in stationary
power generators, rail, and even submarine power applications.
Under the divestiture terms, Federal Mogul will take a preferential buy-in to accumulate a
majority ownership position in the as-yet-unnamed new company.
After divesting its bearing manufacturing operations, Gabriel will return to its roots and remain
India's largest manufacturer of shock absorbers and
McPherson struts assemblies. It started in 1961 as a joint venture with Gabriel Products Company (USA).
Some of the current difficulties can be blamed on production cutbacks in the North American and
other auto industries. They
have been impacting Gabriel, even as low-cost competitors encroach its ride control business.
Gabriel recently landed contracts to supply European, Asian and North American automotive OEMs;
an Arvin-Meritor contract will see more than two million Gabriel-branded shocks worth $20 million
go to North American automakers.
While Gabriel continues profitable, the level is low. Sales in the most recent quarter, ended
June 30, 2006, were Rs 1.4 billion, but returned net profit of just Rs 22.3 million, or 1.5% of sales.
In the past year, Gabriel India's share price has collapsed -- from Rs 308 per share at the end of 2005 to
a recent Rs 22.
Separately, Gabriel announced it is selling property in Mumbai valued at Rs 850 million, a
section of which will then be leased back to house necessary operations.
Full details and terms of the spinoff to Federal-Mogul have not been determined; it is also subject
to approvals by India's high court, stock market, and other regulatory boards. On the Federal-Mogul
end, it is unclear if the acquisition must be approved by the court and/or creditors' committee.
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Unauthorized reproduction is prohibited.
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eBearing.com ... for everything that moves™
Entire contents Copyright 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered
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eBearing.com ... for everything that moves™
Entire contents Copyright © 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered trademarks of eBearing Inc.
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